Genesis halts Withdrawals: The FTX contagion keeps spreading. Stay safe!

Today Genesis Global Capital announced that it is stopping withdrawals. As per sources close to the subject; Genesis interim CEO, Derar Islim, contacted, the firms clients to let them know that withdrawal requests have exceeded existing liquidity. Furthermore, the origination of new loans have been halted. Genesis expects to come with a plan on how to resolve this liquidity crisis by next week. Genesis, is a $2.8 billion lending giant owned by the Digital Currency Group which also is the parent company of Grayscale, the largest holder of Bitcoin with more than $11 billion.

After huge losses from exposure to 3 Arrows Capital (3AC) and now to FTX, Genesis is currently illiquid and facing a bank run.

In turn, this has also affected the Earn product of Gemini platform as it was run through Genesis. In short, Gemini Earn customers are unable to withdraw their funds because of the Genesis withdrawal halt. For some context, Gemini Trust is a US regulated crypto exchange funded by the Winklevoss twins, known also as co-founders of Facebook.

Earlier this week, Genesis Trading which is an independent entity from Genesis Capital Group announced that it has an exposure of $175 million locked in FTX. Well, apparently it wasn't as independent as stated.

The liquidity crisis was already there but Genesis tried to brush it under the carpet and delay the news as much as possible. Grayscale and DCG have stated that they continue business as usual and that these entities are separate and not affected. This rings similar to Alameda supposedly being independent from FTX, or to FTX US funds being safe and unaffected. The next day those statements were proven false.

It is certain that the FTX fiasco will have a continuing cascading effect in the market. Already, some of the most prominent affected companies include BlockFi, Voyager, FTX, FTX US, Alameda, Genesis, Gemini Earn. The list will grow further as the exposure of other entities to FTX will come to light. The unprecedent turmoil in the market will not stop anytime soon and there could be new lows.

Better be safe than sorry and move your crypto away from centralized entities.

"Not your keys, Not your Crypto" is a fitting saying. That's why self-custody and decentralization matter.

The FTX saga continues.